Yankton Company began the year without an investment portfolio. During the year

Question

Yankton Company began the year without an investment portfolio. During the year they purchased investments classified as available-for-sale securities at a cost of $13,000. At the end of the year, the market value of the securities was $11,000. The Yankton Company's financial statements for the current year should show Answer a)
a loss of $2,000 on the income statement and available-for-sale securities of $13,000 on the balance sheet b)
no loss on the income statement and available-for-sale securities of $13,000 on the balance sheet c)
no loss on the income statement, available-for-sale securities of $11,000 and an unrealized loss of $2,000 as a stockholders%u2019 equity adjustment on the balance sheet d)
a loss of $2,000 on the income statement and temporary investments of $11,000 on the balance sheet Yankton Company began the year without an investment portfolio. During the year they purchased investments classified as available-for-sale securities at a cost of $13,000. At the end of the year, the market value of the securities was $11,000. The Yankton Company's financial statements for the current year should show Yankton Company began the year without an investment portfolio. During the year they purchased investments classified as available-for-sale securities at a cost of $13,000. At the end of the year, the market value of the securities was $11,000. The Yankton Company's financial statements for the current year should show a loss of $2,000 on the income statement and available-for-sale securities of $13,000 on the balance sheet no loss on the income statement and available-for-sale securities of $13,000 on the balance sheet no loss on the income statement, available-for-sale securities of $11,000 and an unrealized loss of $2,000 as a stockholders%u2019 equity adjustment on the balance sheet a loss of $2,000 on the income statement and temporary investments of $11,000 on the balance sheet a)
a loss of $2,000 on the income statement and available-for-sale securities of $13,000 on the balance sheet b)
no loss on the income statement and available-for-sale securities of $13,000 on the balance sheet c)
no loss on the income statement, available-for-sale securities of $11,000 and an unrealized loss of $2,000 as a stockholders%u2019 equity adjustment on the balance sheet d)
a loss of $2,000 on the income statement and temporary investments of $11,000 on the balance sheet

Explanation / Answer

Since the security is not sold there is no effect on the income statement but due to the decline of the price the revaluation is to be done so answer is

c. no loss on the income statement, available-for-sale securities of $11,000 and an unrealized loss of $2,000 as a stockholders' equity adjustment on the balance sheet

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